Small companies drive European IT growth

Technology providers are getting their act together where it comes to small and medium businesses, sparking strong growth, says study
Written by Matthew Broersma, Contributor on

Move over big corporations. When it comes to IT spending, small and medium businesses are on the rise, according to a new study from research firm IDC. Furthermore, IDC believes that these smaller firms could end up being the driving force of the IT industry in Europe.

IDC found that IT investment by small and medium businesses is set to grow faster than that of large corporations between now and 2004, driven by the fact that technology vendors are only now beginning to target products specifically at the sub-corporate enterprise. While large enterprise growth will be 10.9 percent, medium enterprise spending will grow 12.1 percent and small business spending will rise 11.6 percent.

"Small and medium businesses [SMBs] are generally cautious about implementing new technologies given their limited capacity to deal with disruption," said Peter Mazzi, senior analyst with IDC's Small and Medium Business research, in a statement. "The lack of flexibility of existing products to match specific company requirements and the general hype surrounding the Internet have therefore discouraged SMBs from investing."

ASPs (Application Service Providers), which offer applications over the Internet and are designed to cut costs for smaller companies, have so far failed to live up to the hype surrounding them, but IDC believes their success will help drive small-business spending.

Of course, many experts believe the effects of the US economic slowdown will soon hit Europe, which could throw such predictions out the window.

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